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Many successful people eventually file for bankruptcy

When many California residents think about bankruptcy, they imagine that only those who rank in the lowest socioeconomic groups pursue this path. In reality, however, people from all walks of life make the decision to file for bankruptcy, including those who achieve high levels of personal and professional success. Bankruptcy is often believed to be proof of financial failure, but, for many, it is simply a powerful financial tool that can help re-establish financial stability.

A recent piece published by the National Bureau of Economic Research listed the four highest-earning career fields in which professionals often choose to pursue bankruptcy protection. The results may come as a surprise to many who believe that once a certain level of success has been achieved, financial problems are a thing of the past. For others, the reasons behind financial problems are easily understood.

Professional athletes are at an elevated risk of bankruptcy, especially after they retire. Celebrities also experience financial turmoil, often due to a failure to make good long-term investment choices with money earned over a relatively short period of time. Celebrities are also vulnerable to lapses in income during career slumps.

Another group that has a high risk for bankruptcy is physicians. While doctors tend to earn high salaries, changes in insurance reimbursements have cut into the profit margins for those who are engaged in private practices. In addition, securing malpractice insurance has become far more costly over the years, and those doctors who have the misfortune of being sued for malpractice often incur hefty legal fees.

For those in California who are preparing to file for bankruptcy, it should be a source of comfort to know that virtually anyone can encounter financial difficulties, regardless of the level of success he or she has achieved. There is no shame in taking advantage of this powerful financial tool to regain stability after a period of turmoil. In fact, a successful bankruptcy has played a role in the financial lives of many who go on to achieve high levels of wealth and success.

Source: theweek.com, "4 high-earning careers surprisingly likely to lead to bankruptcy", Marine Cole, May 5, 2015

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